Theranos founder Elizabeth Holmes’ brother Christian, whom she brought in as a senior manager at her blood-testing startup, in turn hired a crew of his college friends, one of those friends testified Friday at Holmes’ criminal fraud trial.
Daniel Edlin told the jury that he and five other pals of Christian Holmes’ from Duke University were hired as senior product managers, four of them at once in 2011 and two later. Edlin and several of the other Duke grads ended up helping train Walgreens drugstore employees who were to deliver Theranos testing services starting in late 2013, Edlin testified.
The training program included educating Walgreens employees about how Theranos’ technology could make blood testing more accessible and affordable, and the trainees were told that “Theranos was an innovative Silicon Valley technology company,” Edlin testified.
“The purpose,” he said, “was to help the Walgreens technicians get excited and buy into the technology.”
Theranos’ training program for Walgreens staff also involved Theranos engineers, with Holmes personally approving some aspects of the training, Edlin testified.
But three years later, the partnership with Walgreens, in which the drugstore giant paid Theranos $100 million in “innovation fees” and invested another $40 million, had collapsed, with Walgreens suing Theranos and then reaching a settlement.
Holmes founded Theranos in 2003 at age 19. Accused of allegedly bilking investors out of hundreds of millions of dollars, and defrauding doctors and patients with false claims that the company’s machines could conduct a full range of tests using just a few drops of blood, she is charged with a dozen felony fraud counts. She has pleaded not guilty.
Edlin, wearing a navy suit, dark tie, white shirt, and a few days beard growth, told jurors in U.S. District Court in San Jose that he was also tasked with helping organize tours of Theranos’ Palo Alto headquarters for potential business partners, investors and VIPs.
His job included coordinating the set-up of Theranos devices in rooms for demonstrations, he testified. He described one demonstration in 2013, a few months before the rollout of patient testing at Walgreens, when Holmes asked him to set up 10 to 15 of the company’s “miniLab” blood-analyzer devices. The machines, Edlin said, were “powered up” for the visit. Three years later, he testified, he learned that the miniLabs had never been used for clinical patient testing.
For another demonstration, a Theranos software developer suggested the company use a special “demo app” with the machines being shown to visitors, which would ensure that any notifications of processing errors would not appear on the devices’ screens, according to an email displayed in the courtroom.
Edlin told the jury he worked at Theranos from 2011 to late 2016, and quit to go to business school and because he no longer believed “that the company was capable of standing behind the claims it was making about its technology.”
Federal prosecutor John Bostic earlier in the trial said Christian Holmes was hired at Theranos despite lacking a background in science or medicine, and was making clinical decisions to approve re-drawing blood for tests that needed to be re-done. In a 2014 internal email shown to jurors, Christian Holmes wrote that “it seems a redraw is necessary given the disintegration of cells.”
Theranos shut down in 2018, just a few months after Elizabeth Holmes was charged in the criminal case.
If convicted, she faces maximum penalties of 20 years in prison and a $2.75 million fine, plus possible restitution, the Department of Justice has said. Her trial is expected to continue at least until December.
